JEP_2020.34.4.121.pdf (743.33 kB)
A 30-year perspective on property derivatives: what can be done to tame property price risk?
Version 2 2023-06-07, 08:53
Version 1 2023-06-07, 07:36
journal contribution
posted on 2023-06-07, 08:53 authored by Frank J Fabozzi, Robert J Shiller, Radu TunaruRadu TunaruThe housing sector is the largest spot market in the world without a developed derivative contract to serve the risk management needs of market participants. This paper describes the evolution within a wider economic context of property derivatives in the United States and worldwide. We review various economic arguments presented in the literature to highlight the advantages of these financial instruments to society. The paper also provides a critical perspective on the principal obstacles hindering the development of property derivatives based on real estate prices—especially housing prices—and what can be done to overcome these difficulties. The issues discussed can serve as a guide for designing property derivatives capable of hedging real estate risk that has resurfaced time and time again in financial crises.
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- Published
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- Published version
Journal
Journal of Economic PerspectivesISSN
0895-3309Publisher
American Economic AssociationExternal DOI
Issue
4Volume
34Page range
121-145Department affiliated with
- Accounting and Finance Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2020-07-23First Open Access (FOA) Date
2020-11-06First Compliant Deposit (FCD) Date
2020-07-23Usage metrics
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